BUY AMERICAN ACT Meaning and
Definition
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The Buy American Act (BAA) is a United States federal law that was enacted in 1933 with the aim of promoting the purchase of American-made products for federal government agencies. The Act specifies that the government should prioritize purchasing goods produced in the United States for public projects or contracts. It requires that supplies or materials used in these projects must be manufactured or produced primarily in the United States.
Under the Buy American Act, in order for a product to be considered "American-made," it must meet both the domestic content requirement and the manufacturing requirement. The domestic content requirement specifies that at least 50% of the cost of the components of a product must be directly manufactured in the United States. The manufacturing requirement states that the product should be manufactured in the United States, regardless of the origin of its components.
The purpose of the Buy American Act is to support domestic industries, promote job creation, and enhance the country's economic growth by encouraging the consumption of American-made products. It is intended to protect American companies from foreign competition and to ensure that taxpayer money is reinvested in the national economy.
However, the Buy American Act does permit certain exceptions. These exceptions include situations where the product is not produced in sufficient quantities or of adequate quality in the United States, or when purchasing American-made goods would significantly increase the cost of a project.
